Thermal Generation and Trading

Operations

Net electricity generation

Millions of kWh

   
 

2019

2018

Change

Coal-fired plants

37,592

64.366

(26,774)

-41.6%

Fuel-oil and turbo-gas plants

20,887

24,832

(3,945)

-15.9%

Combined-cycle plants

44,980

38,134

6,846

18.0%

Nuclear plants

26,279

24,067

2,212

9.2%

Total net generation

129,738

151,399

(21,661)

-14.3%

of which Italy

22,604

27,757

(5,153)

-18.6%

of which Iberia

51,312

62,020

(10,708)

-17.3%

of which Latin America

23,388

22,441

947

4.2%

of which Europe and Euro-Mediterranean Affairs

32,434

39,181

(6,747)

-17.2%

The decrease in net generation was essentially due to a sharp decrease in coal generation in the amount of 26,774 million kWh, including Iberia (14,673 million kWh), Italy (7,941 million kWh) and Russia (5,239 million kWh) as a result of the decline in their competitiveness. This was partially offset by an increase of 6,846 million kWh in combined-cycle generation, mainly in Italy (3,013 million kWh), Iberia (2,731 million kWh) and Latin America (1,092 million kWh). The increase in nuclear generation can be attributed to the increased use of nuclear energy in Iberia due to poor water availability.

Net efficient generation capacity

MW

    
 

at Dec. 31, 2019

at Dec. 31, 2018

Change

Coal-fired plants

11,695

15,828

(4,133)

-26.1%

Fuel-oil and turbo-gas plants

12,211

12,250

(39)

-0.3%

Combined-cycle plants

14,991

15,021

(30)

-0.2%

Nuclear plants

3,318

3,318

-

-

Total

42,215

46,417

(4,202)

-9.1%

of which Italy

13,480

13,613

(133)

-1.0%

of which Iberia

15,957

16,192

(235)

-1.5%

of which Latin America

7,523

7,734

(211)

-2.7%

of which Europe and Euro-Mediterranean Affairs

5,255

8,878

(3,623)

-40.8%

The decrease in net efficient generation capacity reflects the reduced use of coal-fired plants, especially in Russia (3,623 MW) following the disposal of the Reftinskaya plant mentioned earlier. More generally, “thermal” and “coal” revenue, i.e., from thermal and coal-fired plants respectively, has been declining steadily as a result of corporate strategic choices inspired by a sustainable business model pursuing objectives to combat climate change and achieve decarbonization, as shown in the following table (including percentage out of total):  

 Millions of euro

2019

2018

«Thermal» revenue

10,322

10,894

«Coal» revenue

2,827

4,043

Nuclear revenue

1,296

1,079

Percentage of thermal revenue out of total

12.8%

14.4%

Percentage of coal revenue out of total

3.5%

5.3%

Percentage of nuclear revenue out of total

1.6%

1.4%

Performance

Millions of euro

   
 

2019

2018

Change

Revenue

32,051

27,607

4,444

16.1%

Gross operating margin

1,395

1,117

278

24.9%

Operating income

(3,494)

(118)

(3,376)

-

Capital expenditure

851

839

12

1.4%

The following tables show a breakdown of performance by Region/Country in 2019.

Revenue

Millions of euro

   
 

2019

2018

Change

Italy

23,688

18,954

4,734

25.0%

Iberia

6,261

6,329

(68)

-1.1%

Latin America

1,915

1,726

189

11.0%

of which Argentina

323

227

96

42.3%

of which Brazil

289

270

19

7.0%

of which Chile

828

739

89

12.0%

of which Colombia

110

126

(16)

-12.7%

of which Peru

365

364

1

0.3%

North America

29

3

26

-

Europe and Euro-Mediterranean Affairs

956

1,054

(98)

-9.3%

- of which Romania

42

55

(13)

-23.6%

of which Russia

911

999

(88)

-8.8%

of which other countries

3

-

3

-

Other

54

81

(27)

-33.3%

Eliminations and adjustments

(852)

(540)

(312)

-57.8%

Total

32,051

27,607

4,444

16.1%

The change in revenue is mainly attributable to the item “Sale of commodities under contracts with physical delivery”, reflecting reclassifications, with no impact on margins, linked to the application of the IFRIC Agenda Decision of March 2019 to non-financial transactions with physical delivery measured at fair value in accordance with IFRS 9. For more information, please see section 4.3 of the notes to the consolidated financial statements.

     

Gross operating margin

Millions of euro

   
 

2019

2018

Change

Italy

(14)

22

(36)

-

Iberia

590

425

165

38.8%

Latin America

642

469

173

36.9%

of which Argentina

165

142

23

16.2%

of which Brazil

107

7

100

-

of which Chile

211

124

87

70.2%

of which Colombia

14

51

(37)

-72.5%

of which Peru

145

145

-

-

North America

(18)

(6)

(12)

-

Europe and Euro-Mediterranean Affairs

209

233

(24)

-10.3%

- of which Romania

(2)

-

(2)

-

of which Russia

209

233

(24)

-10.3%

of which other countries

2

-

2

-

Other

(14)

(26)

12

46.2%

Total

1,395

1,117

278

24.9%

The increase in the gross operating margin in 2019 is mainly due to:

  • an increase of €173 million in the margin in Latin America, mainly attributable to the indemnity in the amount of €80 million received from a major customer for having exercised the withdrawal option in advance and to the improvement in the margin of the Fortaleza plant (€108 million) due to a decrease in provisioning costs; 
  • an increase of €165 million in Iberia, essentially attributable to the following factors: 
    • an increase of €279 million in the margin on nuclear generation, mainly due to an increase in volumes generated and in prices, as well as a reduction in taxes on nuclear generation (€43 million); 
    • a reduction of €63 million in taxes and duties on thermal generation due, above all, to suspension of taxes on power generation and on the consumption of hydrocarbons used to generate power in accordance with Royal Decree no. 15/2018 of October 5, 2018; 
    • an increase in writedowns of fuel, consumables and spare parts inventories at a number of coal-fired plants that underwent impairment testing, totaling €103 million, because their value was deemed non-recoverable through operations; 
    • deterioration of €90 million in the results on commodity contracts measured at fair value; 
  • decrease of €36 million in the margin in Italy, mainly due to:
    • an increase in writedowns of fuel, consumables, and spare parts inventories at a number of coal-fired plants, totaling €205 million, because their value was deemed non-recoverable through operations; 
    • recognition of a gain of €108 million by Enel Produzione on the disposal of the Mercure power plant, which was only partially offset by an increase in provisions for environmental costs in accordance with the contract and related to the industrial site; 
    • a decrease of €65 million in costs for environmental compliance in thermal generation; 
  • a decrease of €24 million in the margin posted for Europe and Euro-Mediterranean Affairs, recognized mainly in Russia    

Operating income

Millions of euro

   
 

2019

2018

Change

Italy

(1,908)

(248)

(1,660)

-

Iberia

(1,650)

(274)

(1,376)

-

Latin America

68

266

(198)

-74.4%

of which Argentina

100

89

11

12.4%

of which Brazil

94

(1)

95

-

of which Chile

(233)

30

(263)

-

of which Colombia

(2)

37

(39)

-

of which Peru

109

111

(2)

-1.8%

North America

(19)

(6)

(13)

-

Europe and Euro-Mediterranean Affairs

30

170

(140)

-82.4%

- of which Romania

(1)

-

(1)

-

of which Russia

31

170

(139)

-81.8%

of which other countries

-

-

-

-

Other

(15)

(26)

11

42.3%

Eliminations and adjustments

-

-

-

-

Total

(3,494)

(118)

(3,376)

-

The decrease in operating income is due to the increase of €3,654 million in depreciation, amortization and impairment, despite the improvement in the gross operating margin. More specifically, the increase in depreciation, amortization and impairment mainly concerned:

  • impairment in Italy, Spain, Chile and Russia for coal-fired plants totaling €4,010 million, as described in detail in the “Operating income” section of “Group performance”; 
  • an increase in depreciation and amortization in application of IFRS 16 (€34 million).

Capital expenditure

Millions of euro

   
 

2019

2018

Change

Italy

189

172

17

9.9%

Iberia

388

345

43

12.5%

Latin America

193

251

(58)

-23.1%

Europe and Euro-Mediterranean Affairs

79

70

9

12.9%

Other

2

1

1

-

Total

851

839

12

1.4%

The increase in capital expenditure is mainly attributable to Italy (€17 million) and Iberia (€43 million) and concerns, above all, plant maintenance and safety upgrading. These effects were partially offset by a decrease of €58 million in capital expenditure in Latin America, particularly in Argentina and Chile, regarding coal-fired and combined-cycle plants.